Company Quick10K Filing
Quick10K
Hubilu Venture
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
8-K 2019-10-23 Accountant, Exhibits
8-K 2018-12-31 Enter Agreement, M&A, Delisting, Accountant, Exhibits
8-K 2018-05-30 Enter Agreement, M&A, Control, Other Events, Exhibits
8-K 2018-05-30 Enter Agreement, M&A, Control, Other Events, Exhibits
DVMT Dell 67,852
TPTX Turning Point Therapeutics 1,802
PLYZ Plyzer Technologies 36
OPVS Nanoflex Power 35
UNIR Uniroyal Global 30
NJMC New Jersey Mining 17
FSIC FS Investment 0
NEST Nestbuilder.com 0
ORCC Owl Rock Capital 0
WUYI China Wuyi Mountain 0
HBUV 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Nature of Business
Note 2 - Basis of Presentation and Ability To Continue As A Going Concern
Note 3 - Summary of Significant Accounting Policies
Note 4 - Investments in Real Estate
Note 5 - Property Indebtedness
Note 6 - Promissory Notes Payable
Note 7 - Related Party Transactions
Note 8 - Series 1 Convertible Preferred Shares
Note 9 - Stockholder's Equity
Note 10 - Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II &Mdash; Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Hubilu Venture Earnings 2019-03-31

HBUV 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] quarterly REPORT under SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2019

 

or

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

 

For the transition period from __________ to __________

 

Commission File No. 000-55611

 

Hubilu Venture Corporation

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   47-3342387

(State or other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

205 South Beverly Drive, Suite 205    
Beverly Hills, CA   90212
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (310) 308-7887

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 5, 2019, the number of shares outstanding of the issuer’s sole class of common stock, $0.001 par value per share, is 25,952,125.

 

 

 

   
 

 

table of contents

 

PART I – FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Condensed Balance Sheets 3
Unaudited Condensed Statements of Operations 4
Unaudited Consolidated Statement of Stockholders’ Deficit 5
Unaudited Condensed Statement of Cash Flows 6
Notes to the Unaudited Condensed Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
Item 4. Controls and Procedures 17
PART II — OTHER INFORMATION 18
Item 1. Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 18
SIGNATURES 19

 

 2 
 

 

Part I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

HUBILU VENTURE CORPORATION

Condensed Balance Sheets

 

   March 31, 2019   December 31, 2018 
   (unaudited)     
ASSETS          
Land  $2,226,617   $2,226,617 
Building and Improvements   1,286,499    1,236,911 
    3,513,116    3,463,528 
Accumulated Depreciation   (99,380)   (88,866)
    3,413,736    3,374,662 
Cash   8,156    2,310 
Deposits   6,600    6,600 
Prepaid expenses   1,500    1,500 
           
TOTAL ASSETS  $3,429,992   $3,385,072 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
LIABILITIES          
Property indebtedness  $2,785,788   $2,716,957 
Accounts payable   305    83 
Security deposits   45,230    34,995 
           
Loan Payable   -    12,000 
Promissory notes payable   182,055    182,055 
Preferred shares   548,802    542,547 
Due to related party   496,445    485,300 
           
TOTAL LIABILITIES   4,058,625    3,973,937 
           
STOCKHOLDERS’ DEFICIT          
Common Stock Authorized 100,000,000 common shares, $0.001 par, 25,952,125 issued and outstanding on March 31, 2019 (December 31, 2018: 25,730,500)   25,953    25,731 
Additional paid-in capital   475,797    298,719 
Accumulated Deficit   (1,130,383)   (913,315)
TOTAL STOCKHOLDERS’ DEFICIT   (628,633)   (588,865)
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT  $3,429,992   $3,385,072 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 3 
 

 

HUBILU VENTURE CORPORATION

Unaudited Condensed Statements of Operations

(unaudited)

 

  

Three months ended

March 31, 2019

  

Three months ended

March 31, 2018

 
         
Rental Income  $82,750   $40,196 
           
Expenses          
           
General & administrative   18,723    8,047 
Consulting   196,600    278,185 
Depreciation   10,514    16,301 
Professional fees   6,075    399 
Property taxes   4,823    - 
Rent   6,900    6,900 
Repairs and maintenance   2,027    2,559 
Transfer agent and filing fees   200    300 
Utilities   4,449    3,972 
Operating Expenses   250,311    316,663 
           
Consulting Income   -    (2,500)
Dividends accrued for preferred shares   6,255    - 
Promissory note interest   3,965    4,484 
Mortgage interest   39,287    9,958 
    49,507    11,842 
Net loss for the period  $217,068   $288,309 
Basic and diluted loss per share  $0.01   $0.01 
Weighted average shares outstanding   25,875,788    25,701,167 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 4 
 

 

HUBILU VENTURE CORPORATION

Unaudited Consolidated Statement of Stockholders’ Deficit

(unaudited)

 

   Common Stock   Additional Paid-In   Accumulated   Stockholders’ 
   Shares   Amount   Capital   Deficit   Deficit 
Balance, December 31, 2017   25,526,500   $25,527   $102,123   $(542,842)  $(415,192)
Shares issued for services rendered   204,000    204    196,596    -    196,800 
Net loss   -    -    -    (370,473)   (370,473)
Balance, December 31, 2018   25,730,500    25,731    298,719    (913,315)   (588,865)
Shares issued for services rendered   221,625    222    177,078    -    177,300 
Net loss   -    -    -    (217,068)   (217,068)
Balance, March 31, 2019   25,952,125   $25,953   $475,797   $(1,130,383)  $(628,633)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 5 
 

 

HUBILU VENTURE CORPORATION

Unaudited Condensed Statement of Cash Flows

(unaudited)

 

  

For the

three months

ended

March 31, 2019

  

For the

three months

ended

March 31, 2018

 
OPERATING ACTIVITIES          
Net loss  $(217,068)  $(288,309)
Adjustments to reconcile net loss to net cash provided by (used for) operations:          
Depreciation   10,514    16,301 
Dividends accrued for preferred shares   6,255    - 
Stock-based compensation   177,300    260,160 
Changes in operating assets and liabilities:          
Accounts Payable   222    - 
Security deposits   10,235    (29,216)
Net cash used in operating activities   (12,542)   (41,064)
           
INVESTING ACTIVITIES:          
Building improvements   (49,588)   (16,725)
Net cash used in investing activities   (49,588)   (16,725)
           
FINANCING ACTIVITIES          
           
Property indebtedness   56,831    (5,509)
Loans payable   -    - 
Promissory Notes Repayments   -    (10,000)
Advance payable   -    26,500 
Advance from related party   11,145    25,000 
Preferred Shares issued   -    40,000 
           
Net cash provided by financing activities   67,976    75,991 
           
Change in cash   5,846    18,202 
Cash, beginning of the period   2,310    11,988 
           
Cash, end of the period  $8,156   $30,190 
           
Supplemental cash flow information:          
Cash paid for interest  $   $-
Cash paid for income taxes  $-   $- 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 6 
 

 

HUBILU VENTURE CORPORATION

Notes to the Unaudited Condensed Financial Statements

March 31, 2019

(unaudited)

 

NOTE 1 – NATURE OF BUSINESS

 

Hubilu Venture Corporation (“the Company”) was incorporated under the laws of the state of Delaware on March 2, 2015 and is a publicly traded real estate consulting, asset management and business acquisition company, which specializes in acquiring student housing income properties and development/business opportunities located near the Los Angeles Metro/subway stations and within the Los Angeles area

 

NOTE 2 – BASIS OF PRESENTATION AND ABILITY TO CONTINUE AS A GOING CONCERN

 

The accompanying consolidated financial statements include the accounts of the Company and each of its wholly owned subsidiaries: Akebia Investments LLC, Zinnia Investments, LLC, Sunza Investments, LLC, and Lantana Investments LLC. All intercompany transactions have been eliminated on consolidation.

 

The financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At March 31, 2019, the Company had not yet achieved profitable operations, had an accumulated deficit of $1,130,383 and expects to incur further losses in the development of its business, all of which casts substantial doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. Management intends to focus on raising additional funds either by way of debt or equity issuances in order to continue operations. The Company cannot provide any assurance or guarantee that it will be able to obtain additional financing or generate revenues sufficient to maintain operations.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Preparation and Summary of Significant Accounting Policies

 

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments ) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

 7 
 

 

Fair Value Measurements

 

The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities;
   
Level 2 observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
   
Level 3 assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The carrying value of cash, property indebtedness, accounts payable, advance payable, promissory notes payable, preferred shares and due to related party approximate their fair values.

 

New Accounting Pronouncements

 

Adopted in the Current Year

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.

 

The Company adopted the new standard effective January 1, 2019 and elected the effective date method for the transition. The Company elected the following practical expedients:

 

  Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
     
  Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.

 

Lessor Accounting

 

The accounting for lessors under the new standard remained relatively unchanged with a few targeted updates impacting the Company, which included: (i) narrower definition of initial direct costs that requires certain costs to be expensed rather than capitalized, and (ii) provisions for uncollectible rents to be recorded as a reduction in revenue rather than as bad debt expense.

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. Upon transition the Company recognized right-of use assets and lease liabilities principally for its office lease. There was no impact on the Company’s financial statements on the adoption of Topic 842 given that its office lease does not exceed 12 months in duration.

 

 8 
 

 

NOTE 4 - INVESTMENTS IN REAL ESTATE

 

The change in the real estate property investments for the is as follows:

 

   Three months ended
March 31, 2019
   Year ended
December 31, 2018
 
         
Balance, beginning of the period  $3,463,528   $1,786,257 
Acquisitions:   -    1,645,225 
    3,463,528    3,431,482 
Capital improvements   49,588    32,046 
Balance, end of the year  $3,513,116   $3,463,528 

 

The change in the accumulated depreciation for the three months ended March 31, 2019 and 2018 is as follows:

 

   March 31, 2019   March 31, 2018 
Balance, beginning of the period  $88,866   $49,555 
Depreciation charge for the period   10,514    16,301 
Balance, end of the period  $99,380   $65,856 

 

The Company’s real estate investments as at March 31, 2019 is summarized as follows:

 

   Initial Cost to the Company   Capital   Accumulated     
   Land   Building   Improvements   Depreciation   Encumbrances 
3711 South Western Ave  $508,571   $383,716   $12,400   $46,487   $583,001 
2909 South Catalina Street   565,839    344,856    4,749    40,909    482,680 
3910 Wisconsin Ave   337,500    137,500    60,419    3,543    510,000 
3910 Walton Ave   318,098    191,902    -    6,310    566,607 
1557 West 29th   496,609    146,891    4,066    2,131    643,500 
   $2,226,617   $1,204,865   $81,634   $99,380   $2,785,788 

 

 9 
 

 

NOTE 5 – PROPERTY INDEBTEDNESS

 

The Company’s mortgages are summarized as follows:

 

       Stated interest        
   Principal balance   rate as at        
  

March 31,

2019

  

December 31,

2018

  

March 31,

2019

   Maturity date  Security Deposits 
Akebia Property  $583,001   $585,935    3.95%  August 1, 2021  $8,480 
Zinnia Property   482,680    485,294    3.50%  July 25, 2021   14,200 
Sunza Properties                       
- 3910 Walton Ave.   510,000    510,000    6.00%  April 30, 2020   11,000 
- 3910 Wisconsin Street                     - 
- First Note   251,107    252,228    4.375%  October 1, 2036     
- Second Note   200,000    200,000    9.00%  September 27, 2020     
- Third Note   115,500    40,000    9.00%  April 30, 2022     
Lantana Property                     11,550 
- First Note   443,500    443,500    6.85%  November 1, 2025     
- Second Note   200,000    200,000    6.85%  October 30, 2022     
   $2,785,788   $2,716,957           $45,230 

 

NOTE 6 – PROMISSORY NOTES PAYABLE

 

   March 31, 2019   December 31, 2018 
         
   $182,055   $182,055 

 

Under the terms of the acquisition of the Akebia property at 3711 South Western Avenue, the Company’s consideration for the acquisition included a promissory note (“Akebia Note”). As at March 31, 2019, the Akebia Note had a principal balance of $92,462 and for the three months then ended, the Company paid interest of $1,825 in respect of the Akebia Note.

 

Under the terms of the acquisition of the Zinnia property at 2909 South Catalina Street, the Company’s consideration for the acquisition included a promissory note (“Zinnia Note”). As at March 31, 2019, the Akebia Note had a principal balance of $89,593 and for the three months then ended, the Company paid interest of $2,140 in respect of the Zinnia Note.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Jacaranda Investments, Inc., the Company’s majority shareholder, has advanced the Company $11,145 this quarter. These advances are unsecured and do not carry an interest rate or repayment terms.

 

 10 
 

 

NOTE 8 – SERIES 1 CONVERTIBLE PREFERRED SHARES

 

The Company has authorized and designated 2,000,000 shares of Series 1 convertible preferred stock (the “Preferred Stock”).

 

The Preferred Stock has the following rights and privileges:

 

Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.

 

Conversion – Each share of Preferred Stock, is convertible at the option of the holder, into shares of common stock, at the lesser of $0.50 per share or a ten percent (10%) discount to the average closing bid price of the common stock 5 days prior to the notice of conversion. The Preferred Stock is also subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock.

 

Dividends – The holders of the Preferred Stock in preference to the holders of common stock, are entitled to receive, if and when declared by the Board of Directors, dividends at the rate of 5% per annum, in kind, which shall accrue quarterly. Such dividends are cumulative. No such dividends have been declared to date.

 

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $1.00 (as adjusted, as defined), plus all declared but unpaid dividends.

 

The Preferred Stock matures on September 30, 2019.

 

The predominant settlement obligation of the Series 1 Convertible Preferred shares was considered to be the issuance of a variable number of shares to settle a fixed monetary amount. Thus, these shares are scoped into the guidance of ASC 480-10 and are accounted for as a liability as at March 31, 2019 and December 31, 2018.

 

   # of Shares   Amount   Dividend in Arrears   Total 
                 
Balance, December 31, 2017   460,400   $460,400   $17,395   $477,795 
Issuance of shares for cash   40,000    20,000    1,732    41,732 
Dividends for prior year shares   -    -    23,020    23,020 
                     
Balance, December 31, 2018   500,400    500,400    42,147    542,547 
Dividends accrued             6,255    6,255 
Balance, March 31, 2019   500,400   $500,400    48,402   $548,802 

 

NOTE 9 – STOCKHOLDER’S EQUITY

 

During the three months ended March 31, 2019 the Company issued 221,625 common shares at a fair value of $0.80 per share based on their quoted market price for consulting services, including bookkeeping and accounting services, online marketing services and real estate analysis. The Company recognized consulting fees of $177,300 in connection with this share issuance.

 

NOTE 10 – SUBSEQUENT EVENT

 

On July 12, 2019, the Company acquired 100% membership interest in Elata Investments, LLC., and its real property asset located at 1267 W. 38th Street, Los Angeles.

 

 11 
 

 

Forward Looking Statements

 

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report include forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 (collectively, the “Reform Act”). The Reform Act provides a safe harbor for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements, other than statements of historical fact that we make in this Quarterly Report on Form 10-Q are forward-looking. The words “anticipates,” “believes,” “expects,” “intends,” “will continue,” “estimates,” “plans,” “projects,” the negative of these terms and similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean the statement is not forward-looking.

 

Forward-looking statements involve risks, uncertainties or other factors which may cause actual results to differ materially from the future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Certain risks, uncertainties or other important factors are detailed in this Quarterly Report on Form 10-Q and may be detailed from time to time in other reports we file with the Securities and Exchange Commission, including on Forms 8-K and 10-K. Examples of forward looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our ability to generate operating cash flows and to fund our working capital and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our future products, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include:

 

  the risks of a start-up company;
  management’s plans, objectives and budgets for its future operations and future economic performance;
  capital budget and future capital requirements;
  meeting future capital needs;
  our dependence on management and the need to recruit additional personnel;
  limited trading for our common stock, if listed or quoted
  the level of future expenditures;
  impact of recent accounting pronouncements;
  the outcome of regulatory and litigation matters; and
  the assumptions described in this report underlying such forward-looking statements. Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including:
  those described in the context of such forward-looking statements;
  the political, social and economic climate in which we conduct operations; and
  the risk factors described in other documents and reports filed with the Securities and Exchange Commission

 

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. We believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to update publicly any of them in light of new information or future events.

 

 12 
 

 

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

 

The following is management’s discussion and analysis of financial condition and results of operations and is provided as a supplement to the accompanying unaudited financial statements and notes to help provide an understanding of our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited financial statements.

 

In this Quarterly Report on Form 10-Q, “Company,” “the Company,” “us,” and “our” refer to Hubilu Venture Corporation, a Delaware corporation, unless the context requires otherwise.

 

We intend the following discussion to assist in the understanding of our financial position and our results of operations for the three-months ended March 31, 2019 and 2018, respectively. You should refer to the Financial Statements and related Notes in conjunction with this discussion.

 

Results of Operations

 

General

 

Our mission statement is Strategic Growth through Smart Ventures, which is designed to focus on real estate opportunities that we believe are recession proof and have limited downside risk, while offering high upside potential in equity appreciation and cash flow. We will also continue to assist investors and professionals in the early stage analysis of market opportunities and the evaluation of properties prior to them committing capital for the purchase or the leasing of real estate properties. For our consulting services, we are focusing our marketing efforts in the commercial markets; however, we are also looking at residential and income producing markets. We are using the Internet as well as the services of independent sales consultants to market our services to investors and professionals in Southern California with our primary efforts focused in Beverly Hills and Los Angeles near the University of Southern California campus. Our real estate acquisitions division will actively be pursuing real estate acquisitions near the University of Southern California campus. We have had limited consulting operations and have limited financial resources.

 

We are offering services to investors and professionals with the mission to assist them in investment and property evaluation strategies and provide hands-on support to reduce evaluation time and resources and increase the speed for them to determine whether to proceed with a real estate lease or investment. Besides general property evaluation services, we are offering services to assist the principals with property development ideas and investment structure.

 

In addition to executing five purchase contracts, we updated and launched our website and began marketing the company on various social media platforms including LinkedIn, Twitter, and Facebook.

 

As of March 31, 2019, we had $8,156 cash on hand and in the bank. Management does not believe this amount will satisfy our cash requirements for the next twelve months. We plan to satisfy our future cash requirements - primarily the working capital required for operations by loans from our shareholders or additional equity financing from related or third parties. The additional equity financings will likely be in the form of private placements of common stock. As of March 31, 2019, the Company has borrowed $496,445 from its majority shareholder.

 

Management believes that if subsequent private placements are successful, we will generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

 

 13 
 

 

If we are unsuccessful in raising the additional proceeds through a private placement offering, we will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company with nominal assets to secure. Therefore, we are highly dependent upon the success of a future private placement offering and failure thereof would result in our having to seek capital from other resources such as debt financing, which may not even be available to us. However, if such financing were available, because we are a startup company with no operations to date, we would likely have to pay additional costs associated with high-risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of our common stock or secure debt financing, we would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.

 

We intend to seek various investors to obtain additional equity financing. There can be no assurance that we will be successful in obtaining additional capital from these negotiations. If are unable to raise additional capital, we will either suspend marketing operations until we do raise the cash or cease operations entirely. Other than as described in this paragraph and the preceding paragraphs, we have no other financing plans.

 

We are encouraged by the effectiveness under which our properties are operating. Net Operating Income on our properties is much greater than industry standards of competitive properties in similar locations. To continue to keep our costs low, management does not plan to hire additional employees at this time. Our officers and directors, as well as independent contractors, will be responsible for providing consulting services.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements for the three months ended March 31, 2019 and 2018, respectively, together with notes thereto, which are included in this Quarterly Report on Form 10-Q.

 

Three months ended March 31, 2019 compared to the three months ended March 31, 2018

 

Revenues. Our revenues increased to $82,750 for the three months ended March 31, 2019 compared to $40,196 for the comparable period in 2018. The increase is due to the acquisition of 4 new properties.

 

Operating expenses. Operating expenses include general and administrative expenses, consulting expense, depreciation, professional fees, property taxes, rent, repairs and maintenance, transfer agent and filing fees, and utilities. In total, operating expenses decreased $66,352 to $250,311 for the three months ended March 31, 2019 compared to $316,663 for the comparable period in 2018. The decrease is primarily due to lesser charges incurred with respect to the fair value of common shares issued for consulting fees.

 

General and administrative expenses increased $10,676 to $18,723 for the three months ended March 31, 2019 compared to $8,047 for the comparable period in 2018.

 

Consulting expenses decreased $81,585 to $196,600 for the three months ended March 31, 2019 compared to $278,185 for the comparable period in 2018. The decrease is attributable to the Company using less consultants.

 

Depreciation expense decreased $5,787 to $10,514 for the three months ended March 31, 2019 compared to $16,301 for the comparable period in 2018.

 

Professional fees increased $5,676 to $6,075 for the three months ended March 31, 2019 compared to $399 for the comparable period in 2018. The increase is primarily due to the timing of the invoices provided by our professional advisors.

 

Property tax expense increased $4,823 to $4,823 for the three months ended March 31, 2019 compared to $0 for the comparable period in 2018. The increase is due to paying our taxes earlier in the first quarter.

 

 14 
 

 

Rent expense stayed stable $6,900 for the three months ended March 31, 2019 which is that same at $6,900 for the comparable period in 2018.

 

Repairs and maintenance expense decreased $532 to $2,027 for the three months ended March 31, 2019 compared to $2,559 for the comparable period in 2018. Even though we acquired an additional property during the quarter, our aggressive management and excellent condition of the properties resulted in reductions of repairs and maintenance.

 

Transfer Agent and Filing Fees decreased $100 to $200 for the three months ended March 31, 2019 compared to $300 for the comparable period in 2018. The decrease is due to less monthly fees paid.

 

Utilities expense increased $477 to $4,449 for the three months ended March 31, 2019 compared to $3,972 for the comparable period in 2018. The increase is due to additional property acquisitions.

 

Promissory Note Interest expense decreased $519 to $3,965 for the three months ended March 31, 2019 compared to $4,484 for the comparable period in 2018.

 

Mortgage Interest increased $29,429 to $39,287 for the three months ended March 31, 2019 compared to $9,858 for the comparable period in 2018. The increase is due to the acquisition of 4 new properties.

 

Net loss. Our net loss decreased $71,241 to $217,068 for the three months ended March 31, 2019 compared to $288,309 for the comparable period in 2018. The decrease is attributable to the revenue and expenses discussed above.

 

Liquidity and Capital Resources. For the three months ended March 31, 2019, we borrowed $9,500 from our majority shareholder, which was advanced to us interest free. We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.

 

Our total assets are $3,429,992 as of March 31, 2019, consisting of $3,413,736 in net property assets, $8,156 in cash, $6,600 in deposits and $1,500 in prepaid expenses.

 

Our total liabilities are $4,058,625 as of March 31, 2019.

 

As of March 31, 2019, our total stockholders’ deficit was $628,633 and our accumulated deficit was $1,130,383.

 

We had $12,542 in cash used in operating activities for the three months ended March 31, 2019 including $217,068 in net loss which was offset by non-cash charges of $10,514 for depreciation, $177,300 in stock based compensation, $6,255 in respect of accrued preferred share dividends, a net increase of $222 in accounts payable and $10,235 in security deposits.

 

We used $49,588 in investing activities for the three months ended March 31, 2019, which was used for building additions and improvements.

 

We had $67,976 in cash provided by financing activities for the three months ended March 31, 2019.

 

We had $41,064 in net cash used in operating activities for the three months ended March 31, 2018, which included $288,309 in net loss, which amount was offset by non-cash charges of $16,301 for depreciation and $260,160 for common shares issued in respect of consulting services rendered as well as a net change of ($29,216) for accounts payable.

 

 15 
 

 

We had $16,725 in cash used by investing activities for the three months ended March 31, 2018, which was used for building improvements.

 

We had $75,991 in cash provided by financing activities for the three months ended March 31, 2018, which resulted from $5,509 in cash used to reduce property indebtedness, $26,500 provided by an advance payable, $25,000 provided by related party advances, $40,000 provided from the issuance of preferred shares and $10,000 used for the repayment of promissory notes.

 

The Company had no formal long-term lines or credit or other bank financing arrangements as of March 31, 2019.

 

The Company has no current plans for the purchase or sale of any plant or equipment.

 

The Company has no current plans to make any changes in the number of employees.

 

Impact of Inflation

 

The Company believes that inflation has had a negligible effect on operations over the past quarter.

 

Capital Expenditures

 

The Company spent $ 49,588 on building improvements during the three months ended March 31, 2019.

 

CRITICAL ACCOUNTING POLICIES

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Areas where significant estimation judgments are made and where actual results could differ materially from these estimates are the carrying value of certain assets and liabilities which are not readily apparent from other sources and the classification of net operating loss and tax credit carry forwards.

 

The following critical accounting policies affect our more significant estimates and assumptions used in preparing our consolidated financial statements.

 

Revenue Recognition

 

Management has determined that all of the Company’s leases with its various tenants are operating leases. Rental income is generally recognized based on the terms of leases entered into with tenants. In those instances, in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition will commence when the improvements are substantially completed, and possession or control of the space is turned over to the tenant.

 

 16 
 

 

Asset Impairment

 

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

Item 4. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the fiscal quarter covered by this quarterly report on Form 10-Q were not effective at a reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 

(b) Changes in Internal Controls over Financial Reporting

 

During the three-month period ended March 31, 2019, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 17 
 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

  (a) The following exhibits are filed with this quarterly report on Form 10-Q or are incorporated herein by reference:

 

Exhibit    
Number   Description
     
31.1   Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
31.2   Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*.
     
32.1   Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*.
     
*   Filed herewith.

 

 

 18 
 

 

SignatureS

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  HUBILU VENTURE CORPORATION
   
November 18, 2019 /s/ David Behrend
  David Behrend
  Chairman and Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

 

 19